Thinking, Fast and Slow - Daniel Kahneman

keeping £20 or the aversion to losing £30. Saving lives with certainty is good, deaths are bad.
Most people find that their System 2 has no moral intuitions of its own to answer the question.
I am grateful to the great economist Thomas Schelling for my favorite example of a framing
effect, which he described in his book Choice and Consequence. Schelling’s book was written
before our work on framing was published, and framing was not his main concern. He reported
on his experience teaching a class at the Kennedy School at Harvard, in which Bon he linthe
topic was child exemptions in the tax code. Schelling told his students that a standard
exemption is allowed for each child, and that the amount of the exemption is independent of
the taxpayer’s income. He asked their opinion of the following proposition:
Should the child exemption be larger for the rich than for the poor?
Your own intuitions are very likely the same as those of Schelling’s students: they found the
idea of favoring the rich by a larger exemption completely unacceptable.
Schelling then pointed out that the tax law is arbitrary. It assumes a childless family as the
default case and reduces the tax by the amount of the exemption for each child. The tax law
could of course be rewritten with another default case: a family with two children. In this
formulation, families with fewer than the default number of children would pay a surcharge.
Schelling now asked his students to report their view of another proposition:
Should the childless poor pay as large a surcharge as the childless rich?
Here again you probably agree with the students’ reaction to this idea, which they rejected with
as much vehemence as the first. But Schelling showed his class that they could not logically
reject both proposals. Set the two formulations next to each other. The difference between the
tax due by a childless family and by a family with two children is described as a reduction of
tax in the first version and as an increase in the second. If in the first version you want the poor
to receive the same (or greater) benefit as the rich for having children, then you must want the
poor to pay at least the same penalty as the rich for being childless.
We can recognize System 1 at work. It delivers an immediate response to any question about
rich and poor: when in doubt, favor the poor. The surprising aspect of Schelling’s problem is
that this apparently simple moral rule does not work reliably. It generates contradictory
answers to the same problem, depending on how that problem is framed. And of course you
already know the question that comes next. Now that you have seen that your reactions to the
problem are influenced by the frame, what is your answer to the question: How should the tax
code treat the children of the rich and the poor?
Here again, you will probably find yourself dumbfounded. You have moral intuitions about
differences between the rich and the poor, but these intuitions depend on an arbitrary reference